Reps. Lee, Tlaib, Sen. Sanders, Colleagues Reintroduce Tax Excessive CEO Pay Act to Rein in Corporate Greed
WASHINGTON, DC – Representatives Barbara Lee (CA-12) and Rashida Tlaib (MI-12) and Senators Bernie Sanders (D-VT), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), and Ed Markey (D-MA) reintroduced the Tax Excessive CEO Pay Act (H.R. 7041, S. 3620) yesterday to rein in corporate greed and improve pay equity.
In 2022, big company CEOs were paid 344 times as much as a typical worker, up from an average pay ratio of just 21 to 1 in 1965. Among the 100 S&P 500 corporations with the lowest wages, 40 percent had CEO-worker pay ratios of 500 to 1 or higher in 2022. At a dozen of these “Low-Wage 100” firms, the CEO made more than 1,000 times the company’s median worker pay.
The Tax Excessive CEO Pay Act gives corporations an incentive to narrow these extreme divides by lifting up the bottom and bringing down the top of their pay scale. Under the bill, companies with huge gaps between their CEO and median worker pay would face higher federal corporate tax rates.
“New reports from Oxfam International indicate that if current trends persist, poverty will not be eradicated for another 229 years,” said Rep. Barbara Lee. “With the shareholder class raking in greater profits than ever in history, I refuse to accept this future. As elected officials, we have a moral obligation to address this corrosive inequality at the source. I urge my colleagues to support workers who are fighting for a fair share of the fruits of their labor by endorsing the Tax Excessive CEO Pay Act.”
“Corporate greed is a disease that has long afflicted our country. CEOs are now making 400 times more than their average worker,” said Rep. Rashida Tlaib. “It’s disgraceful that corporations continue to rake in record profits by exploiting the labor of their workers. Working families deserve to live with human dignity. I’m proud to join my colleagues in reintroducing the Tax Excessive CEO Pay Act to address the massive income and wealth inequality in our nation. It’s time for the rich to pay their fair share.”
“The American people understand that today we are moving toward an oligarchic form of society where the very rich are doing phenomenally well, while working families continue to struggle to put a roof over their heads, feed their families and pay for the basic necessities of life,” said Sen. Sanders. “The American people are sick and tired of CEOs making nearly 350 times more than their average employees while over 60 percent of Americans live paycheck to paycheck. At a time of massive income and wealth inequality, the American people are demanding that large, profitable corporations pay their fair share of taxes and treat their employees with the dignity and respect they deserve. That is what this legislation will begin to do.”
“CEOs profiting off the backs of workers and making hundreds of times more than them is just plain wrong,” said Senator Markey. “It’s more than time to rein in the millionaire and billionaire CEOS. The Tax Excessive CEO Pay Act puts an end to corporate greed, closes the income gap, and ensures that the wealthiest members of society pay their fair share.”
“Millionaire and billionaire CEOs at massive corporations are cashing in larger and larger paychecks even as their workers — who make those profits possible — barely see their pay keep pace with rising costs. These obscene gaps are grossly unfair to workers and harmful to our economy as a whole. This legislation is an important step toward narrowing income inequality in America and building a more inclusive economy with more shared prosperity,” said Senator Van Hollen.
Under the Tax Excessive CEO Pay Act, tax penalties would begin at 0.5 percentage points for companies that pay their top executives between 50 and 100 times more than their typical workers. Companies that pay top executives over 500 times worker pay would face the highest increase in their tax rate, at 5 percentage points. All private and publicly held U.S. corporations with average annual sales for the three preceding years of at least $100 million would be subject to the tax.
The bill would raise an estimated $150 billion over 10 years that could be used to support working families and reduce inequality.
This bill would also discourage the outrageous CEO bonuses that give executives an incentive to take excessive risks, from the reckless lending that led to the 2008 crash to the flooding of communities with deadly opioids. Instead, the bill would encourage fair pay practices that are good for the bottom line. Extensive academic research has shown that extreme pay disparities undermine corporate effectiveness by reducing employee morale and productivity and raising turnover rates.
At the height of the UAW strike last fall, 62 percent of Americans surveyed said they believed that “worker pay should be increased whenever CEO pay is increased to prevent inequality.”
The Tax Excessive CEO Pay Act is endorsed by:
Americans for Financial Reform
Center for Popular Democracy
Coalition on Human Needs
Institute for Policy Studies/Global Economy Project
National Council of Churches
NETWORK
Patriotic Millionaires
Public Citizen
Strong Economy for All
Take on Wall Street
United for Respect
To view the bill text, click HERE.
To view FAQs, click HERE.
To view a letter of support from labor unions, anti-poverty groups, and other leading economic justice organizations, click HERE.